Archive for the ‘General’ Category

The New Truths About PR (Part 2)

Wednesday, November 17, 2010 by:David Zahn
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In the previous column, David Meerman Scott shared some ideas about how business owners can leverage the new media options to maximize their business performance. In this second and final column, Mr. Scott concludes answering additional questions. As a reminder, he will be speaking at the FCPRA in Stamford, CT on November 22nd (register at www.fcpra.org.).  Scott’s most recent book has recently hit the best seller list on both the Wall Street Journal and USA Today as of 11/7/10.

David Meerman Scott, Expert in Social Media to speak in Fairfield County

 

6.       Is it best for the CEO to participate or to have a professional staffer do it?

DMS: Only people who are passionate about a subject should participate. If the CEO is passionate about the business then they should be communicating. (I fear for you if your CEO has no passion. Probably time to quit your job.) NEVER should a CEO employ a ghost writer!!! The more people that participate in your company – the more you benefit. The mind-set has to start at the top. If your leaders get the need for real-time speed they must give explicit permission and proactively advocate cultural change at all levels. Companies who are wiling to take the challenge of participation in real time have the potential to create a new market niche, and a competitive edge by delivering faster than everybody else.

Of course, the downside is that without a plan for how to share and what to share online – the potential damage done by an untrained person can be enormous. Social media mistakes can hamper the best intentions of any corporate executive.

7.       What resources exist to learn how to do it “right?”

DMS: Dare I say that my books: The New Rules of Marketing and PR and Real-Time Marketing and PR are great starts? Both are bestsellers and New Rules is now in its second edition, and is published in 26 languages from Bulgarian to Vietnamese

Of course, the presentation given on the 22nd will address many of the tips and techniques included in the books, as well.

8.       How do you measure success? What is the objective?

DMS: How are sales? How many people are talking about you? How many people are recommending you to their networks? Are you having fun?

Like all marketing efforts, if there is no clear benefit or advantage derived from the participation in social media, then it needs to be re-assessed and improved so that it does create a positive outcome.

9.       What can one do to monitor or track social media influence?

DMS: Monitoring what’s being said and using social Web analytics to make reacting to it a part of your organizational culture is critical for any business that is serious about operating in real time.  Two free tools to use right now if you are not already are news and blog alerting tool like Google Alerts and a Twitter client like TweetDeck. Enter your company name, products, services, and category of product and monitor what’s happening.

10.   What companies do it best? 

DMS: I love talking about the US military. All 3 million members of the Army, Navy, Air Force, Marines, and Coast Guard are encouraged to be active in social media. If the Pentagon brass have overcome fear, so can you.

11.   How do you cut through the clutter of all of the inane chatter about personal nonsense to share a business message?

 DMS: You understand that in today’s real time revolution, the swift are out front, and you EARN attention online by creating something that is interesting and publishing it online for free: A YouTube video, blog, research report, series of photos, twitter stream, ebook, and the like. Instead of creating jargon-filled, hype-based advertising, you create online content that your buyers naturally gravitate to.

12.   How should marketing budgets be allocated between and among PR/Advertising/Social Media?

DMS: How do you allocate budget for the telephone? I think online communications is not a nice to have. It is essential, like the phone, and therefore should not be thought of as a budget item.

13.   How do I decide whether to blog/LinkedIn/Twitter/Facebook or do anything else/nothing at all?

DMS: Before you decide this, you need to decide who you want to reach and which tool will work best on your or your company’s behalf for doing so. You must also decide what content you will use to engage the audience with those tools. Whether you are a solopreneur or a major corporation content has in many ways leveled the playing field. When you build content especially for your audience, you build a relationship with people before you’ve even met them. When it’s obvious you understand your buyers and their problems, it jars your visitors into paying attention.

 For more insight and discussion around the evolving fields of marketing, PR, social media, etc.; be sure to register for the presentation at www.fcpra.org.

The New Truths About PR (Part 1)

Sunday, November 14, 2010 by:David Zahn
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Come hear David Meerman Scott in Stamford

One of the most disconcerting things that can happen in business is that once the owner believes they have figured out what to do, what works, and how to do it; the capabilities and requirements change.  The “rules of the game” shift and what once was seen as progessive is now outmoded or replaced by newer methods of performing.  This is perhaps nowhere as true as it is in Marketing and Public Relations.  With the speed of change in technology, the pervasisveness of social  networks, and the cultural acceptance of many of the new sites and platforms for communication; there has been a revolution in how to integrate the use of social networks into one’s marketing and public relations efforts. 

 On November 22nd, the Fairfield County Public Relations Association (FCPRA) will host renowned expert, author, and consultant, David Meerman Scott in Stamford at the Italian Center for a breakfast meeting scheduled to start at 7:30am to discuss how businesses can leverage the “real-time marketing skills” needed to compete in today’s marketplace. In what promises to be an illuminating presentation, Scott will address issues including:

  • How real-time marketing and public relations can help and hurt today’s communications professionals;
  • Ways in which the Internet fundamentally impacts the way in which we do business; and
  • How speed and agility are a major advantage in today’s competitive marketplace.

David Meerman Scott will speak in Stamford on November 22nd.

 Scott recently answered a number of questions posed to him in anticipation of his presentation addressing the new truths of real-time marketing and PR.

1.       Define social media (what it is, what it is not)

DMS: Most discussions about “Web 2.0” and “social media” focus on the technology . We hear discussions about blogging, blog software, YouTube, and tools like Twitter and Facebook. But what few people have figured out is what kind of content brings out the enormous potential of this technology. What that requires is understanding your buyers and building the content to get them to notice your ideas.

  1. So, in essence, the need for being customer-focused supercedes the enticement to use social media to explore the outer reaches of what the technology “can do.”
  2. 2.    What are the “new rules” vs. advertising and PR?

DMS: Many marketers steeped in the tradition of product advertising naturally feel drawn to prattle on and on about their products and services. Marketers need to understand this, “Nobody cares about your products and your services (except you).” What people do care about are themselves and how a product can solve their problems. Instead of hyping products and services, new rules demand that marketers/companies create interesting, compelling and useful online content for their potential customers.  In all your communication, think how it benefits the customer, not what’s in it for you. 

3.       What are the “dangers” of participating in social media?

DMS: The only danger is choosing to not actively participate online because even if you choose as a company to not participate, your brand and your company are still being talked about.  Many company executives and PR people trace their worries about social media to their belief that “people will say bad things about our company.” This fear leads them to ignore blogs, online forums and prohibit employee social media participation. But the benefit of this kind of communication is that you can monitor in real-time what’s being said and respond appropriately. You can meet your customers’ needs in real-time and that’s an incredible advantage over your competitors.

Of course, we have recently also seen CEO’s like John Mackay run into trouble when he blogged under an assumed name about the merger with Wild Oats Markets.  Steve Jobs, of Apple has also been criticized for how he has answered customer posts on blogs and corporate bulletin boards.  So, while it is advisable that companies not shy away from social media, it is also appropriate to realize that whatever is shared will be subject to review by anyone and everyone.

4.      What should companies do to make sure they are adhering to good “brand messages” in social media that are on strategy?

DMS: I think the nature of “brand messages” is inherently dangerous because it forces marketers to be stupid because it means that companies talk in an egotistical manner. The right thing is to forget about you and focus on your buyers and your marketplace and let that drive how you communicate.  

5.       Is Social Media private communication or not?

DMS: Everything you put on this Web is accessible and it will continue to be so.

Here in Connecticut, there is heightened interest in this issue as a woman was recently fired over Facebook posts.

Part 2 will include additional questions with David Meerman Scott in preparation for his presentation to the FCPRA to be delivered in Stamford.  For tickets, please go to http://fcpra.org/.

Does Nostalgia Sell?

Friday, November 12, 2010 by:David Zahn
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As we approach the Thanksgiving holiday, many of us begin to reminisce about the smells, tastes, and memories of going back “home” (whether home is a few time zones away or just down the street). In the haze of our recollections, we tend to romanticize our experiences and heighten the more positively prominent aspect of our history or legacy. We also tend to downplay the negative or view it through a different lense. The tension, hurt feelings, having to sit at the “kid’s table,” etc. now are remembered much more fondly than when they were a more current experience.

For most people, the thought of returning to a place we are familiar with and know well (and are well- known)  is sought after much more commonly than a place we are unfamiliar with or from which we feel disconnected.  However, that insight seems to be discounted by many business people and experts. 

Conventinal Wisdom

 If an entrepreneur were to listen to most business experts, read the latest writings of gurus, or investigate what passes for progressive thinking, s/he would comer away believing that one must constantly be innovative, re-create the business to adapt to new realities, and seek to re-invent onself.  And, it is hard to argue with any recommendation that suggests that the business owner should constantly be vigilant about monitoring, measuring, and challenging the relevance of the business versus customer expectations, competitive realities, and current economic pressures.  However, taken to an extreme, the business begins to resemble a “Flavor of the Month” entity and loses what makes it the company it was, has been, and potentially is and will be into the future.

So, how does one align remaining contemporarily relevant, and not losing what made it “home” for previous customers, shoppers, or clients?

Personal Example

Nathan's is best in Coney Island

My personal experience with this is around the hot dogs, french fries, and orange drinks available at an outdoor seating restaurant in Coney Island, NY called Nathan’s.  Living in Connecticut, it is a rare treat to head down to Brooklyn (3 hours or so), stand in a line 20 deep, have to step over and around all of the bird droppings, pigeons begging for food, avoid the spilled saurkraut, mustard and ketchup on the ground, and then have to battle for a seat at one of the outdoor tables that have not been wiped down from previous diners since the Carter Administration, or choose to eat over a filled garbage can and swat away the bees or flies that attempt to share the meal with you.

How appetizing does that sound to you?  Of course, it does not at all.  And yet, even though there are now “outposts” of Nathan’s restaurants in airports and in free-standing locations, those are not nearly as desirable as the “original.”  Afficianados even maintain that somehow the food tastes better BECAUSE it is eaten in that environment.  They maintain that the “pain” of the experience enhances the enjoyment.

What Is the Application?

So, what can be done to take a lessons learned approach to this seemingly random experience? 

Businesses are sometimes best served to remain as tey have been if there is a “legacy memory” that exists.  When Nathan’s attempts to expand their menu (they tried pizza for awhile), it is not endorsed by the customers.  One goes to Nathan’s for hot dogs, crinkle cut french fries and perhaps one or two other items.  Trying to be “fashionable” and appeal to those with different tastes is outside their ability.  No one would ever consider ordering a Chicken Satay (if it even existed on their billboard menu) or think of asking for a garden salad. 

 A recent article on innovation ran in Forbes that speaks to the problems that some businesses confront when they attempt to innovate and run the risk of diffusing their identity in the marketplace.  Sometimes, it is best to just be what and who you are, warts and all.  Afterall, it is family!

Working Out Without The Sweat

Wednesday, November 3, 2010 by:David Zahn
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As we approach the holidays, many of us are concerned about not indulging in bad dietary habits and then having to live with the guilt of weight gain. To combat the excesses of holiday eating, many of us will have to endure the sweat, pain, and fatigue of working out.  Contrarily, businesses have a chance to work out as well, but their workout is not nearly as tiring, does not cause perspiration, and in fact; actually makes things easier and more productive.

Began at GE

As with many business initiatives,Fairfield’s  General Electric (GE) was at the forefront of a particular business improvement process.  Since the late 1980′s GE has been conducting a methodology for reducing complexity in business processes and improving employee accountability for results.  The process is referred to as “GE WorkOut” and has now been adapted by many other companies to help them create more productivity and efficiencies.  The process is focused on:

  • Streamlining existing processes and simplify the steps/complexity of procedures
  • Reduce and eliminate work tasks that do not contribute value
  • Identify and prioritize new business needs/initiatives quickly
  • Reduce the time required to make decisions
  • Increase the level of compliance with new initiatives
  • Improve implementation support for business processes
  • Empower workforces to asssume responsibility for results (ownership of outcomes).

How it Works

The WorkOut process is implemented by bringing members of cross-functional groups (stakeholders in the outcome, production, delivery, or other involvement) together and ensuring that those closest to the work output can contribute recommendations that can be acted upon fairly immediately.  Ordinarily, recommendations are tied to action plans and implemented within three months (90 days).  Senior management is linked into the process by providing oversight and guidance on the strategic imperatives or most important priorities forbusiness  improvement.

When correctly implemented, the WorkOut process builds synergies across different functional silos that often emerge within organizations to focus attention on business issues that are shared or experienced in common across departments.  Further, it serves to reduce the disparity in views on issues between the management team and those tasked with performing job tasks. Lastly, it also encourages shared values that positively impact the business without regard for organizational structure, managerial level, tenure, etc.  The internal morale and commitment to the organization therefore often improves.

The WorkOut process includes immediate follow up and action planning to implement recommendations.  Unlike other committees that are formed to “study” issues and rarely take the steps to recommend actions to improve results.  The WorkOut process is most effective when it can be implemented and focused on solving a business issue that cuts across multiple functions and has the endorsement and support of senior managers, while also assigning the right mix of people that are empowered to act upon the output of the WorkOut team’s recommendations.

"Talent wins games, but teamwork and intelligence wins championships."

Importance of Team

As anyone who has ever been part of a group or a team tasked with achieving an objective can attest, if the group is not universally committed to the same goal, the chances of succeeeding is greatly diminished.  In many organizations, management makes decisions without a full appreciation for what those decisions may mean for those that have to execute or implement them.  Those that have responsibility for ensuring that work is completed correctly according to management’s wishes are often left feeling under-appreciated and as if management is disconnected from the ramifications of those decisions.

Michael Jordan famously commented that, “talent wins games, but teamwork and intelligence wins championships.”  The WorkOut process provides opportunity for team members to collaborate to ensure that the work is done according to realistic contraints, and done in a way that maximizes the skills of the team members.

Salary = Success

Wednesday, October 27, 2010 by:David Zahn
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We are currently in the long-term  ripple effects of the recession and many small business owners have had to close up shop and pursue other opportunities.  The empty storefronts up and down Main Street, USA are testament to just how hard it is to succeed in today’s current economic climate.  Still other business owners have chosen to forego their salary in an attempt to apply those dollars to sustaining the business through marketing expenses, inventory purchases, raw material acquisition, etc.

When the choice is to close the business or reduce salary, many choose to reduce salary.

Unfortunately, the wisdom of doing that long-term is questionable and may point out an issue that requires being addressed in order for the business to succeed.  Obviously, every entrepreneur anticipates that the business will generate more income than expenses.  Even those that do not place profit as the highest priority will still seek to cover expenses and have some left over for themselves.

American Express Open recently conducted a study that was reported in the Boston Herald that discovered that:

  1. Half of the business owners did not collect a salary
  2. Of those that did, 44% were paying themselves a salary of less than $50,000.

This may be in part a result of the temporary need for a business to reduce spending to survive, and may not be totally reflective of the total compensation that the business owner takes from the business.  However, it is still a startling insight that indicates just how difficult many entrepreneurs are currently finding it.

Self First

While there may be times when a business owner may make the decision to invest their salary back into the business, if it happens more commonly than not; it is time to reconsider the business model.  Conventional wisdom would point out that it seems wise to “put the business first” – in fact, it is best to put yourself first. If the business owner is not taking care of his or her own needs, then the business will become something that is regretted and viewed as drudgery, obligatory, and more of a drain than something that sustains the business owner.

Quoted in the article is business consultant, Alice Bredin, who identified, “If there’s not enough money to pay the boss, then something is probably wrong. Maybe prices are too low or too much money is being spent on staff or rent. It may be time to cut jobs, find a smaller place or spend more on marketing. If you’re not paying yourself, you are hiding problems.”

Business Plan

While it is acknowledged that there are times when the salary may have to be delayed or skipped due to market dips, cash flow shortfalls, or opportunities to make a purchase that may have a long-term ROI that makes it worthwhile; the business plan should have been built to include sufficient income for the business owner to live on.  Failing to meet that threshold is indicative of an issue with the business model, executional practices, and strategies.

Guidelines

While there may not be a chart one can check to see how much salary one should receive, as each business and business owner are so individual and unique; the business should be able to spin off salary on a consistent and regular basis.  Conversely, it is also important for the salary the owner takes not be so high that it cripples the business and becomes an impedimen to long-term success.

Consulting with an Accountant is often a good idea to ensure that salary decisions are reflective of what is in the best interests of the owner and the business.  Using projections and forecasts can effectively identify the likelihood of growth in the short-term and future expenses.  Generally, a company’s profit can be used as a guideline to set the owner’s salary, but, ultimately, whether or not a business owner can take the money will depend on accounts receivables and cash-flow.

Of course, the owner may “lend money” to the business to overcome a short-term crisis or issue.  So, if an owner is borrowing money to sustain the business over a temporary shortfall, then the question of whether topull a salary becomes problematic. It goes without saying that borrowed money from “creditors” (credit cards, bank loans, family and friends, etc.) wil need to be paid back.  Therefore, the interest on the loan should be factored into the decision.

Will Health Insurance Hamstring Entrepreneurs?

Wednesday, October 20, 2010 by:David Zahn
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Of all of the politically contentious issues being debated in Connecticut right now between the candidates running for office, Barack Obama’s healthcare initiative is perhaps the one that is the most polarizing. As small business owners and entrepreneurs, this issue is one that brings into focus the collision of idealism and practicalities.

What follows is an interview with Amanda Austin, Director of Federal Policy in the Senate  for the National Federation of Independent Business (NFIB).  NFIB defines itself as being the “voice of small business” and as such, very much lobbies and advocates strongly for the issues that impact the small business person.

NFIB is strongly opposed to the healthcare legislation

Healthcare coverage is not free. Someone is going to pay if there are requirements on individuals and businesses to pay into the healthcare system

1) What exactly are the new Health Care laws and why should a business owner care about them?

ANSWER: The federal “Patient Protection and Affordable Care Act” was enacted by Congress in March of this year.  The centerpiece of President Obama’s domestic agenda, the new law imposed 2,700 pages of new rules and taxes on businesses that have already resulted in higher insurance costs and will no doubt drive them higher.  Just as alarming, the law authorizes the federal government for the first time in history to order private American citizens to purchase a commercial service (a health insurance plan) regardless of whether they want it, or whether they can afford it.  On behalf of its members, who are deeply concerned by the substantial new costs and the unprecedented personal mandate, NFIB this year became the only business organization in the country to challenge the law in federal court.

2)  How does the new Health Care laws impact the entrepreneur and his/her family?

ANSWER: Small business has been struggling with rising healthcare costs for decades. But the new healthcare law is not the answer – it simply compounds current problems and makes healthcare even more expensive for small businesses. Costing nearly a trillion dollars, the new law will send health insurance costs soaring, increase the cost of doing business and set our economic recovery backward with destructive policies

Under the new law, employers can expect a variety of new taxes, new mandates, new rules and, of course, increased healthcare costs. New rules on what will be deemed “qualified” coverage will go into effect in 2014 called “minimum essential coverage.” This is a federal floor of coverage that will satisfy the individual mandate discussed above. Small business will most likely be “buying up” on coverage, possibly forcing some businesses that already provide insurance to pay more to comply or be faced with difficult decisions about whether to continue to offer coverage. For larger firms, an “employer mandate” in the form of a ‘free rider penalty’ will take effect in 2014. This is a confusing and extremely complicated formula taking into account part-time workers along with a federal affordability standard for what employees can afford. Both the part-time count and the affordability standard can trigger penalties for employers upwards of $2,000 or $3,000 per employee.

In terms of new taxes and fees that small businesses can expect – they will come in a variety of forms: from new payroll taxes, to Medicare taxes to paperwork compliance to new taxes being pushed onto fully-insured plans. The new $14 billion+ tax on health insurance is an especially egregious tax, since it directly and specifically hits small businesses and individuals. Considering that the majority of small businesses purchase fully insured plans, they will be subject to this tax and its $billion price tag. Big businesses and unions were specifically exempted.

The penalty of $2,000 per worker levied on small businesses with more than 50 workers that can’t afford to provide healthcare (and which have workers accessing the exchange) is another indirect tax.  Medicare payroll taxes will also increase to 2.35 percent and there is a new 3.8 percent Medicare tax on non-wage income like dividends, interest and capital gains.

Ultimately, the cost of private insurance will increase for everyone as carriers and medical providers build into their premiums and fee schedules the substantially higher cost of compliance (this is already happening in a number of states, as noted above).  Individuals who do not now purchase insurance will be forced to do so under threat of financial penalty.  And, with 32 million newly covered individuals and no increase in the supply of medical providers, facilities, equipment or medicine, access to quality care for Americans could be restricted.

3)  How has the new law impacted the insurance companies?  Service providers (Doctors, Hospitals, etc.)?

ANSWER: NFIB cannot speak for insurance companies, but news articles from across the country dating back to June report on numerous carriers applying for rate increases made necessary by the new mandates under which they must operate.  Insurance rates have already begun to climb.  Remember that the CBO warned that cost increases were to be expected in the small group market specifically.  That prediction appears to have been accurate.  This is exactly the opposite of the reform small businesses needed and wanted. 

4)  What can small business owners/entrepreneurs do to minimize costs/maximize coverage for themselves and their employees?

ANSWER: Healthcare coverage is not free. Someone is going to pay if there are requirements on individuals and businesses to pay into the healthcare system. As the employer, if your employees go into the exchange, you’ll be left with a portion of that bill to help cover your workers. The biggest worry is that these exchanges will be highly regulatory in nature and private products will not be priced well for purchase. Ideally there would be a healthy mix inside and outside the exchanges that would foster competition within both markets.  Government-run markets are rarely so efficient.  In fact, we have seen what has happened in Massachusetts, whose system is sort of like a prototype for the new healthcare law:  as soon as the system was erected it plunged into financial trouble because many more people than anticipated spilled into the exchanges and costs rapidly spiraled out of control. 

Defenders of the federal program often argue that tax credits will help offset higher costs.  But not everyone will receive a tax credit. Tax credits for employees (individuals and families) and are only available to people who meet strict income level requirements. They are also temporary and they do nothing to reduce the overall cost of health care.  They merely provide temporary relief without reforming the cost structure. We have created a tax credit calculator (www.nfib.com/creditcalculator) that can help determine whether a business owner will qualify for a credit or not – sadly, the feedback we have received is that the credit is far too limited  in scope to help the amount of people the Administration once claimed.

5)  Does the new law change how entrepreneurs will use HSAs?  Are there other tips or techniques you are seeing/recommend small business owners do to take advantage of the new law?

ANSWER: HSAs will still exist but there will be limits on single and family deductibles ($2,000 for single and $4,000 for family) and limits on how much you can put in accounts like flexible spending accounts (limited to $2,500 annually under PPACA). Both of these combined really put the brakes on these products that are meant to be consumer-oriented and really allow the individual or employer choices.  Overall the bill moves farther away from putting the consumer in control and closer to a European-style entitlement program.

6)  Do you have any statistics or insight into how the new law is likely to impact hiring?  Benefits offered? Etc.?

ANSWER:  It’s difficult to find data on this. But the new law is loaded with perverse incentives that could certainly result in less hiring and slower growth. Cost is one of the greatest predictors of whether a business will offer and maintain benefits.  Higher costs for hiring workers will naturally result in fewer new jobs.  Additionally, thresholds for many of the mandates and fees fall on calculations for full-time equivalent employees, often resulting in firms deciding to limit their number of employees in order to minimize additional costs and taxes. 

While clearly an issue that cuts to the core of many small business operators’ ability to meet expenses, expand, grow, and hire new people – this issue will ripple through the upcoming elections and well beyond.

Getting a Handle on the Economy

Tuesday, October 12, 2010 by:David Zahn
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Entrepreneurs are as glued to the media’s reporting of economic indicators as anyone else.  Of late, the pronouncements made that the economy is healthy and growing are more often drowned out by those that speak to the continuation of doom and gloom.  While it is the state of things that most of us do not care to dig all that deeply to understand where these pronouncements come from, we all tend to take the newspaper or website headline as if it is unsailable.  The 3o second story on the television news that includes dire warnings and charts with arrowheads pointing down or in red are assumed to be based on good science or significant research.  However, without understanding what went into the analysis and how the reporting agency chooses to interpret information, the wrong analysis can easily be applied to the data.

First Thing To Know

The most important thing to understand is that one only gets answers to the question that is asked.  An answer is prompted by the question, and if the question is a forced choice between pre-determined options – then one of those options will be what is reported.  Not necessarily what someone thinks or feels, but only what they are given as an option to answer.  For example, asking people the question and giving them the following choices:

“What do you think about the taxes you pay?”

a) love to pay them

b) hate paying taxes

c) No opinion

Would it be a surprise of more people chose “B” than the othe choices?  And when the headline blares, “90% of People Don’t Get Fair Value From Taxes” – is that really a true reflection of how people feel?  Does the survey lend itself to that insight?  And yet, that is an overly simplified way that information gets reported.

Surveys only reflect what is asked

What Are the Factors?

When trying to assess the health of the economy, and specifically as it relates to small business owners and their perceptions of the economy, one of the leading sources of objective information is Tatum.  The Tatum LLC  Market Research Firm and Consultancy produces a montly study on what small business executives are thinking about key indicators or factors that go into their assessment of the economy.  The study asks executives to consider the prior thirty days from the study and project to the future sixty days from the study to provide answers.

Among the indicators used by Tatum, LLC (and available at October Study), are:

  1. Order Backlogs
  2. Capital Expenditure Commitments
  3. Employment
  4. Capital Availability and Pricing

Order Backlogs represent the amount of business that has been requested byu customers to be delivered in relatively short-term timeframes.  Generally speaking, entrepreneurs reported being more optimistic about the next 2 months, though their most recent performance on this measure has been flat to slightly less than previous months.  The optimism may be fueled by the upcoming elections, a belief that the efforts made by the current government to stabilize the economy are working,the upcoming holiday season or a whole host of other factors.  Still, entrepreneurs seem to feel that the opportunities for increased business before the end of the year are improving.

Capital Expenditure Commitments refer to the purchase of machinery, technology, or other operational purchases.  Again, entrepreneurs seem to be spending slightly more than in prior periods and are planning on spending even more in the next 60 days.  While some of the spend may be placed against gaining efficiencies as opposed to the need to increase productivity, it is still a healthy sign that businesses are seeking to invest in their operations and are coming out of their shell on spending to improve their performance.

Employment is obviously one of the key indicators that nearly everyone looks at and tries to assess in making pronouncements about the health of the economy.  In the most recent Tatum Study, the results were cautiously optimistic.  Employment numbers are inching higher, but not at the rate that had been hoped for, and not at a level that suggests that the economy has returned to being strong.  Still, an upward movement is a positive and it is best viewed in context.  While it may not be growing faster than at other times in our economic history, it is still growing and expanding.

Capital Availability and Pricing reflects how effective the federal government is in stimulating growth through making money available to lending institutions and banks, who in turn will make money available to the small business owner.  The results are that interest rates are remaining low, and going lower in an effort to encourage lending by the banks to small business owners, but that the conservativeness of bank executives to loan that money has not allowed the process to become as fluid as wanted or needed.  There is optimism that it will improve, but there is also frustration on the part of business owners that it has not happened. Those businesses that can afford to do so, are availing themselves of loans now while money is “cheap” (relatively low interest rates allow companies to borrow and then create assets, expand, hire, or do things that can easily be paid back once the purchase made with the loaned money begins to generate a return).

While the economy is an often talked about subject, and makes one of the lead stories in nearly all news outlet reportings; it is important to remember that the interpretation is going to be based on the information collected.  The information collected is based on what was asked.  And the intepretation is often based on a bias or agenda that the reporting agent may have that is reflected in how they choose to report it.

Sales Tracking Essentials

Thursday, October 7, 2010 by:David Zahn
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Any good business owner knows that it is essential to keep a close eye on sales and sales performance.  While the rest of the company’s efforts may be aligned and working productively, without a strong sales effort; the chances of success are nil.

One sales management consultant, Suzanne Paling has written a helpful guide for the entrepreneur or business owner to assist in the tracking and monitoring of sales performance measures.  Her book, “The Accidental Sales Manager: A Survival Guide for CEOs (or owners or presidents) Who Find Themselves Managing Salespeople,”  reviews the most essential sales reports needed to maintain control of the sales process. 

How a sales funnel or pipeline works

An essential part of any sales reporting effort is to denote where time is being spent (efficiency) and what tasks are contributing to the sales effort (effectiveness). Obviously, spending large chunks of time that do not result in sales or bring the likelihood of a sale occurring closer is to be avoided.  However, that can only be done if the activities are tracked and measured.  Therefore, it is advisable to identify a few manageable reports to allow the business owner to maintain control and oversight over the sales effort and ensure that productivity is maintained.

The Call Report

Maintain a list of what prospects and customers were approached during the time period (day/week/month) and what the outcome of that contact or “call” was for the salesperson.  In this way, the number and quality of sales calls can be tracked. Over time, the following averages can begin to emerge:

  • “Average” number of calls required to “close” a deal
  • What job functions within corporate accounts or what commonalities among consumers exist that are most likely to purchase
  • For corporate accounts, what industries are most often sold to (and for what uses or purposes of the the product or service).

By then tracking what is included on the report (and what is missing or not on the call list), corrective measures can be taken or additional attention can be given to address any issues.

The Productivity Report

Business owners are well served to track what activities tend to generate what kind of response or performance.  The data to be tracked may include: the number of outbound calls, conversations, webinar metrics, voice mails, e-mails, customer meetings, product demonstrations, and proposals generated in a measured time period.  Once a standard has been established for expectations, actual performance can be compared against the benchmarks established for each activity.

The Productivity Report serves as an early warning signal to identify where issues may be arising that will lead to sales shortfalls.  Especially in longer-cycle sales where multiple sales calls are often necessary to close a deal or make a sale, it is essential to identify issues as quickly as possible to provide remediation before sales are adversely impacted.

Sales Pipeline or Funnel

Maintaining the proper balance between prospects, customers, and those in process of becoming customers is an essential part of managing the sales process. Given that there are often steps to the sale or phases in the sales cycle, it is informative to track where different targeted prospects are in their decision-making to purchase or not.   Here again, an early warning signal can be sounded if there are too few targets in any particular phase or if the time to process from one phase to the next is lagging behind expectations and therefore will have a deleterious effect on total sales.  Paling offers these as examples of typical pipeline phases:

• Phase I—Decision-maker expresses interest in product or service

• Phase II—Salesperson meets with decision maker

• Phase III—Decision-maker participates in product demonstration

• Phase IV—Proposal submitted

• Phase V—Sale closed/sale lost

Sales Forecast

The document or report that drives most other business decisions is the sales forecast.  Inventory levels, labor allocation, cash flow, etc. are all based off of the sales forecast. The accuracy of this report strongly affects the entire organization and therefore, must be measured as accurately as possible.  Certain caveats exist when interpreting a sales forcast.  Some common things to be aware of include:

• Are there specific months where a sales person (or even the whole company) tend to      outperform or underperfom the average productivity?

• How many accounts drop out/get added from one month to the next?

• Does the rep have an easier/more difficult time achieving quota in one product line vs. another? Are some customer groups easier to sell to than others?  Are certain job functions less likely to buy (and if so, at what point in the sales cycle does that decision get made)?

Being responsible for the sales effort is as much a data driven task as it is one based on relationship building with clients and customers.  A smart business owner will look to manage the function by using the appropriate tools to manage the process more accurately and gauge success more closely.

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